TODAY’S STUDY: NEW ENERGY IN AUSTIN AND DENVER

The debate continues to rage in the New Energy community over the best way to build to scale. There is plenty of contention about how public resources and tax dollars should be put to work. And everyone seems to have someplace they don't want to see solar panels, wind turbines or transmission lines, even those who know it is vital to build more.

The study highlighted below compares efforts by two exemplary cities to iron some of these issues out and advance New Energy.

Moral of the story: Building New Energy is complicated. It takes money, patience and persistence - but the benefits to the economy, the workforce, energy security, air, water and public health far outweigh the costs.

In short, building New Energy is the right thing to do.

Fight on.

Local Energy Plans in Practice: Case Studies of Austin and Denver
D. Peterson, E. Matthews and M. Weingarden, March 2011 (National Renewable Energy Laboratory)

Executive Summary

This report examines the successes and difficulties that two large cities, Denver, Colorado and Austin, Texas, have experienced in implementing their respective city-wide energy plans. The report considers factors that have assisted or hindered putting energy initiatives from each plan into practice, including political, financial, and logistical realities. The report also examines the goals and design of each plan, and how throughout the implementation process the cities have altered expectations or the direction of energy initiatives included in the plans. This report provides state and local government policy makers and analysts with a more nuanced understanding of the successes and challenges distinct cities encounter in putting a city-wide energy plan into practice, including the following general lessons from the experiences of Denver and Austin.

• Importance of state support: A city without a municipally owned utility (MOU) can develop and deploy local energy programs, but will likely have more options and a greater impact if supportive state-level energy policies are in place. An aggressive state renewable portfolio standard will aid a city in advancing its energy/climate goals by requiring the local utility to supply city residents and businesses with cleaner energy generated from renewable resources. City energy programs also benefit from the establishment of state demand-side management requirements for utilities.

• Financial commitment from the city: City funding for staff and energy initiatives provides organizational and administrative stability for the implementation of a city-wide energy plan. A city with an MOU is well positioned to implementing local energy efficiency programs and increase renewable energy supplied to citizens, but will likely need to make a substantial political and financial commitment in dedicating utility revenues for energy program and initiatives. Cities with an MOU can also justify the use of utility-generated revenues on energy efficiency and renewable energy programs and initiatives as a less expensive alternative to purchasing additional generation resource capacity.

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• Leveraging partnerships with non-city entities: Cities, particularly cities that don’t make a significant city budget allocation towards the implementation of energy programs (either from the general fund or utility revenues), should look to leveraging financial and other resources from non-city partners. These partners can include federal, state, and other surrounding local governments, as well as local utilities, businesses, universities, and community organizations. Partnerships can provide a substantial boost to the impact of and participation in outreach initiatives included in energy plans.

• Reliance on federal program funding: Initiatives and programs of energy plans that rely heavily on funding from federal programs will likely be more difficult to sustain and maintain as federal energy program commitments fluctuate. Cities should look to develop energy programs dependent on multiple funding sources, striving to develop energy initiatives that will be viable even if federal dollars are unavailable.

• Benefits to targeting government operations: Most cities have the opportunity to advance programs targeting energy use in government operations – including building efficiency improvements, green fleets, and installing renewable energy on government facilities. Cities have greater control over government facilities energy use and can directly benefit from the cost savings from energy efficiency improvements. Cities can integrate energy efficiency improvements into capital improvement programs, utilizing existing funds available for building retrofits, equipment replacement, and maintenance.

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Introduction

Local governments in the United States typically have some measure of control over how energy is used within their jurisdictional borders, often with direct influence over land use matters, transportation planning and development, and building codes. Some local governments, such as cities with municipally owned utilities (MOUs), have substantial control over how energy is produced. Local governments also generally have a close relationship with the residents and businesses, providing an opportunity for direct engagement with constituents around energy issues. As a result, local governments are in a key position to develop and implement innovative energy policies that will play an important role in transforming how the United States uses and generates energy.

Over the last decade, many city governments have taken action on energy policy issues beyond transportation, land use, and building codes, developing and implementing initiatives and programs intended to promote energy efficiency improvements and renewable energy projects at city facilities and across the community. City leaders elect to advance these local energy programs to achieve cost savings, improve local air quality and quality of life, boost economic development, and establish the city as an environmental leader.

An increasing number of cities are embracing the concept of energy planning, where a city develops a plan to organize, prioritize, and track energy policy initiatives and programs (Masters & Randolph, 2008). In recent years, most cities with significant energy policy programs have incorporated energy initiatives into climate-oriented energy plans, known as climate action plans or climate protection plans. These climate-oriented energy plans provide an accounting of initiatives and policies that a city anticipates will reduce greenhouse gas (GHG) emissions. Although these plans target GHG emissions reductions as the primary goal, they also function as local energy plans, incorporating and defining strategies that promote efficient use of energy and development of renewable energy projects.

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This report examines climate-oriented energy plans adopted by two large cities: Denver, Colorado and Austin, Texas. The report looks at the following questions:

• How are the plans structured to address the political, fiscal, and logistical realities of the city?

• What sort of success has each city had in implementing their energy initiatives of their plans?

• What have been the obstacles to implementing these energy initiatives?

• How have the cities had to alter the design and expectations for the plans?

• What role do community, business, utility, and other government partners play in implementing the energy initiatives?

• What financial resources were utilized in funding energy initiatives under the plans?

• What results have been tracked?

This report will not directly compare and contrast the structure and implementation of the energy plans of Denver and Austin. Instead, the report will provide a separate case study of the implementation process and status of each energy plan, examining how each city has structured, adopted, and adapted energy initiatives outlined in the plan. Through these case studies, this report hopes to build a more nuanced understanding of the successes and challenges distinct cities encounter in putting a comprehensive citywide energy plan into practice.

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Background on Local Energy Plans

Historical Context

In the late 1970s and early 1980s, a dramatic spike in energy costs prompted a number of local governments to make local energy conservation a priority and pursue policies that to promote energy efficiency and renewable energy in their communities (Randolph, 1981). Despite progress made by a number of cities during this period, energy policy fell from the list of priorities of most local governments as energy prices collapsed by the mid-1980s (Masters & Randolph, 2008).

Local governments, particularly cities, began to reexamine a role for local-driven energy policy in the 1990s, motivated largely by concerns over energy costs, energy security, and urban sustainability. City leaders began to look beyond land use and transportation planning and building codes, expanding local energy programs to include initiatives that promoted efficient energy use and installation of renewable energy systems at city-owned facilities and local residences and businesses.

As concerns over climate change increased through the late 1990s and 2000s, more city governments began to address energy use in their communities. Organizations and city networks were formed that encouraged cities to make commitments and develop strategies for reducing GHG emissions.1City energy programs and initiatives began to be incorporated into climate-oriented energy plans, often referred to as climate action plans or climate protection plans, which were developed and adopted by cities to establish targets and strategies for reducing GHG emissions. These climate-oriented energy plans are used by cities to plan, organize, prioritize, and track energy programs and initiatives, providing a general outline of a city’s comprehensive energy strategy (Wheeler, 2008).

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Characteristics of Local Energy Plans

Energy plans are typically the central product of an energy planning process employed by local governments seeking a comprehensive strategy for addressing local energy issues. This energy planning process is well defined in a number of documents, but the basic step-by-step framework is shown in Figure 1 (DOE, Community Greening: How to Develop a Strategic Energy Plan, 2009).

Local energy plans vary in scope, depending on the goals set forth by the leadership and characteristics of the community. In addressing the scope of the energy plan, a city may choose to target energy use in government operations, across the broader community, or both. Cities may target only government operations because that is where they have the most control over energy use.2Expanding an energy plan to include the broader community often requires greater voluntary participation from the residents and businesses of the city to meet plan objectives, as well as a sizable political, and often financial, commitment from the city government. Cities may choose to develop energy plans that target the broader community in an effort to reduce the city’s environmental impact, reduce energy costs for residents, and boost local economic development (DOE, Community Greening: How to Develop a Strategic Energy Plan, 2009).

A significant factor influencing the scope and content of an energy plan is whether a city has an MOU. A substantial number of cities in the United States have an MOU, where the city owns and operates the utility supplying the city and its citizens with electricity. 3 An energy plan adopted by a city with an MOU will often include goals and strategies for the utility to obtain more electricity generated by renewable energy resources.4An MOU may also allow the city opportunity to establish programs funded directly from revenues generated by the MOU’s business operations. Cities without an MOU typically have little to no control over how the power supplied to the city is generated, and often depend on the state to establish policies requiring the servicing utility to promote energy efficiency and meet defined renewable energy generation requirements.

Transportation, infrastructure, and land use planning are integral to addressing energy consumption by a community, and can be included in a city’s energy plan. Many cities have incorporated these elements into their climate-oriented energy plans. For example, Seattle, Washington and Boston, Massachusetts have adopted climate-oriented energy plans with substantial strategies targeting transportation and land use in the broader community. 5However, many cities elect to address energy strategies for reducing energy use through energy plans that are separate and distinct from transportation and land use plans.

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Report Methodology and Structure

This report will focus on the energy plans of two cities: Denver, Colorado and Austin, Texas. Both cities developed and adopted climate-oriented energy plans containing strategies designed to promote efficient use of energy and renewable energy in government operations and across the broader community. Both cities have had citywide plans in place since 2007, so each has had time to begin implementing energy action items included in their respective plans. Denver provides an example of an energy plan where the city does not have control over the local utility (an investor-owned utility operating in several states), while Austin is a city with an MOU.

Denver and Austin both address transportation and land use planning largely through plans separate from their respective climate-oriented energy plans. This report will examine only the limited transportation, land use, or zoning initiatives included in the climate-oriented energy plans of Denver and Austin and will not discuss plans beyond the climate-oriented energy plans…

Information used in the report was obtained through publicly available sources, discussions with individuals inside and outside of the National Renewable Energy Laboratory, and interviews and correspondences with key city staff responsible for implementing the energy plans of Denver and Austin.

For each city, the report discusses and describes the following:

• Characteristics of the city

• The city’s relationship with local utility

• Historical background and context regarding local energy planning efforts

• Development, scope, and content of the energy plan

• Support from the community, businesses, utility, and/or state

• Implementation status and progress of each energy initiative included in the energy plan

• Trends and future prospects.

The American Recovery and Reinvestment Act of 2009 provided funding to local governments for energy programs through the Energy Efficiency and Conservation Block Grant (EECBG) Program.7 Both Denver and Austin have received and used EECBG funding for various energy initiatives under their respective climate-oriented energy plans. Although this report will indicate how EECBG funds were used for selected energy initiatives, it will not provide a detailed accounting of how each city’s EECBG funds were used…

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Denver

Summary and Discussion

The DCAP is a climate-oriented energy plan that establishes the city’s first comprehensive strategy for reducing citywide GHG emissions, largely through series of strategies intended to promote more efficient use of energy and increase the consumption of electricity generated from renewable energy sources. Many of the programs and initiatives included in the DCAP have only recently been initiated, so it is too early to determine how effective they will be in meeting the targets established by the DCAP. However, the following observations can be made regarding the design and implementation of DCAP:

• The DCAP functions as a guidance document for the city’s energy efforts, largely by making recommendations for establishing new energy programs and initiatives for reducing citywide GHG emissions.

• Colorado state policies factor significantly into the energy strategies set by the DCAP. The state RPS and DSM legislation have spurred Xcel to offer various financial incentives to customers. Without these policy interventions at the state level, the city would likely have had fewer options available in reducing GHG emissions and energy consumption at municipal facilities and across the broader community. The state RPS also requires Xcel supply the city an increased percentage of renewable energy, which means that Denver residents and businesses are using cleaner electricity.

• Taking into account that the city does not 1) have control over its own utility or 2) have line-item funding for the implementation of the DCAP, the energy programs and initiatives included in the DCAP focus on leveraging financial and personnel resources offered through the utility, community and business partners, and state and federal agencies.

• While the city has been able to obtain funding from a variety of resources, the implementation of several energy initiatives are dependent on federal grants, particularly Recovery Act funding. The longevity and/or scope of these initiatives are tenuous if federal program dollars are unavailable in the future.

• Denver has found success in leveraging partnerships with non-city entities, which lead and manage key energy initiatives within DCAP, including the Denver Bike Sharing and Residential and Corporate Climate Challenge programs.

• The city has deferred to Xcel and the state on a number programs included in the DCAP, including programs offering free home energy audits, establishing tiered rate structures, and promoting smart meters.

• The city has found the least success in implementing new stand-alone voluntary programs, including the time-of-sale energy audit and disclosure project, and individualized travel marketing program.

• Building on the past success of the city’s Green Fleets program, the city has advanced energy programs targeting city government operations, including 1) working with Xcel on the development of a comprehensive strategy for DSM in city facilities and 2) utilizing alternative financing mechanisms to contract for and install 12 MW of solar PV on city property at little up-front cost to the city.

• The city is currently working on revising the DCAP. The revised plan will refocus the city’s efforts on the more successful aspects of the original plan and is expected to be published in mid-2011…

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Austin

The program staff works with representatives from all city departments to develop the plans, identify departmental CO2 reduction goals, track progress, and address barriers for implementation. The goals and the monthly consumption data will be loaded into an online reporting system that will provide city department directors with energy and water use each month per building and fleet fuel use.

Summary and Discussion

Building on a long commitment to energy issues by the city and Austin Energy, the ACPP, a climate-oriented energy plan, establishes very ambitious utility, community, and city goals for reducing GHG emissions. The Austin Climate Protection Program has made significant progress moving towards these aggressive targets. The following observations can be made regarding the design and implementation of ACPP:

• In addition to establishing aggressive energy goals for the city, the ACPP serves as an organizational and tracking structure for the array of existing energy programs and initiatives offered by Austin Energy.

• ACPP initiatives depend on internal funding authorized by the city council, making the plan less susceptible to variations in federal and state financial support. In order to reach the ACPP goals, this financial commitment will need to continue.

• Some of the most ambitious action items of the ACPP have seen resistance from various sectors of the business community alarmed by the prospect of rising electricity rates. Concerned with keeping the city a competitive location to do business, the Austin City Council has given indications that achieving Austin Energy’s generation and emissions targets will be limited by the community’s tolerance of energy cost increases.

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• Austin Energy has demonstrated that local DSM programs can have a high impact in reducing energy demand. The ACPP sets very ambitious targets for the DSM program, without making significant changes to the rebates, loan, and technical assistance programs offered to residents and businesses. Moving forward, Austin Energy will be challenged to achieve significant additional savings through the existing voluntary programs.

• The city has shown some hesitance in paying the premium cost for supplying its own facilities with GreenChoice power.

Achieving ACPP targets included in the Municipal Plan significantly depends on the Austin Climate Protection Program’s ability to coordinate an array of energy initiatives across divisions of Austin Energy and other city departments. Although making progress towards the ACPP targets, the program does not have the authority over city departments to mandate compliance. The city has recently acknowledged this deficiency and created a new position within the city manager’s office. It is anticipated that this sustainability officer will have greater authority in moving city departments to work towards meeting the ACPP goals and targets.

However, whether the program will be able to meet its aggressive energy and climate goals for the utility, community, and city will ultimately be determined by the commitment of the city’s citizens and businesses. Austin Energy has developed detailed plans for supplying the city and citizens with more renewable energy and reducing energy demand through DSM programs. To reach the targets using these plans, the city will likely require additional financial commitments from residents and businesses.

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Conclusion

This report provides an overview of the climate-oriented energy plans developed, adopted, and implemented by Denver and Austin. The intention of this report is to examine the implementation process and status of energy initiatives in climate-oriented energy plans of cities with divergent characteristics. The experiences of Denver and Austin can inform other local governments seeking to adopt new or adapt existing energy plans. The following are some general lessons from their experiences.

• Importance of state support: A city without an MOU can develop and deploy local energy programs, but will likely have more options and a greater impact if supportive state-level energy policies are in place. An aggressive state RPS will aid a city in advancing its energy/climate goals by requiring the local utility to supply city residents and businesses with cleaner energy generated from renewable resources. City energy programs also benefit from the establishment of state DSM requirements for utilities.

• Financial commitment from the city: City funding for staff and energy initiatives provides organizational and administrative stability for the implementation of a citywide energy plan. A city with an MOU is well positioned to implement local energy efficiency programs and increase renewable energy supplied to citizens, but will likely need to make a substantial political and financial commitment in dedicating utility revenues for energy program and initiatives. Cities with an MOU can also justify the use of utility-generated revenues on energy efficiency and renewable energy programs and initiatives as a less expensive alternative to building additional power plants.

• Leveraging partnerships with non-city entities: Cities, particularly cities that don’t make a significant city budget allocation towards the implementation of energy programs (either from the general fund or utility revenues), should look to leveraging financial and other resources from non-city partners. These partners can include federal, state, and other surrounding local governments, as well as local utilities, businesses, universities, and community organizations. Partnerships can provide a substantial boost to the impact of and participation in outreach initiatives included in energy plans.

• Reliance on federal program funding: Initiatives and programs of energy plans that rely heavily on funding from federal programs will likely be more difficult to sustain and maintain as federal energy program commitments fluctuate. Cities should look to develop energy programs dependent on multiple funding sources, striving to develop energy initiatives that will be viable even if federal dollars are unavailable.

• Benefits to targeting government operations: Most cities have the opportunity to advance programs targeting energy use in government operations – including building efficiency improvements, green fleets, and installing renewable energy on government facilities. Cities have greater control over government facilities energy use and can directly benefit from the cost savings from energy efficiency improvements. Cities can integrate energy efficiency improvements into capital improvement programs, utilizing existing funds available for building retrofits, equipment replacement, and maintenance.

In designing and adopting citywide energy plans, many cities have set ambitious goals and targets for more efficient energy use and increased renewable energy consumption. Initiatives and programs under these plans will likely have varying degrees of success, with some initiatives proving to be unfeasible for one reason or another. As cities decide what energy initiatives to include in a broad strategy, they should fully consider strategies for overcoming the financial, political, and bureaucratic barriers to successful implementation for a particular program. If the energy plan includes the establishment of a more aggressive target for an existing program, the city would be well served to identify the barriers to and solutions for increasing the program’s impact.

With limited staffing and financial resources available, cities may want to structure an energy plan around a core set of initiatives that have a high likelihood of being successfully implemented. Including aggressive, trend-setting action items in energy plans can be encouraged, as long as the probability of successful implementation is acknowledged. Incorporating this mix of strategies will allow for policy experimentation, while still increasing the likelihood that the city will achieve early successes, an outcome necessary for building and maintaining community and political support for the city’s ongoing and future energy efforts.